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“3. If a lot of Person B’s do this all at once, can this actually affect the prices of the stock and if so, what direction?”

That is the perfect question since that is exactly what we are talking about here.

Short sales have the effect of putting downward pressure on stock prices. If you look at all open offers to sell and see a $10 stock having 100 offers of $5 and only 25 offers for $30, you might think the stock is going down in price.

You may see stock sales close lower, too. Stock prices are ‘spot’ prices, meaning on the spot, right now, in the moment. A $10 stock selling at $9.90 cents at this second doesn’t mean that is what the stock may be worth 2 seconds from now when another sale closes at $10.20. Stocks vary wildly all day long.

What the Reddit Raiders are doing is sacrificing their money to buy a $10 stock at higher and higher prices. They don’t want profit and couldn’t care less if they lose everything. They want revenge on the rich who manipulate the stock market. Good or bad, revenge is their goal. They buy stocks at higher and higher prices which forces all those big banks to lose money on all those illegal, and legal, short sales.

Funny thing, though, is that as the stock climbs higher and higher, the banks keep having to buy to cover their short sales and buy the stock at the higher prices, and these Reddit Raider are making millions! Eventually, at the end, someone takes a bath as the stock price tumbles to a more reasonable value. That might be the banks or the Reddit Raiders.